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The Meek Who Make Good With The Mighty

December 20, 1992

Cover Story

THE MEEK WHO MAKE GOOD WITH THE MIGHTY

Last year, Quick's Candy Inc. shipped millions of its gourmet lollipops to U.S. troops during Operation Desert Storm. It was a tall order for the tiny Buchanan (Mich.) company, which had to deliver the huge quantity with military precision. But then, company founder Howard E. Quick knows all about that: He's been selling to Kmart Corp. for three years.

Retailing may be increasingly dominated by giant chains and mammoth manufacturers, but Quick's, with sales of about $3.5 million, shows how small suppliers can survive. "Smaller vendors can move quickly, and if they can execute a quality product, they'll still be a viable source," says Jim Glime, Kmart's manager for business development.

Quick's lollipops, retailing for 50 cents to 65 cents apiece and in flavors from pina colada to black currant, sold briskly in some Kmart test stores. Now, nine-year-old Quick's supplies all 2,400 Kmart stores in the U.S. and Canada. It's investing $2 million in new equipment that will triple candy output.

`THE RIGHT WAY.' Besides producing a tasty lollipop, the family-run confectioner also works hard to make Kmart's life easy. Quick's invested $15,000 in computer systems that let it monitor inventories at Kmart's 12 distribution centers. When supplies run low, Quick's automatically replenishes inventories, with no prior approval from Kmart. It's one of only 250 Kmart vendors with that capability.

Private-label women's apparel maker Jik Ltd. hopes to gain an edge with technology, too. The Miami-based company has spent millions over the past five years to develop information and manufacturing systems to serve its big customers, including Target Stores and Mervyn's. With about $50 million in sales, Jik now turns some orders around in 5 weeks, down from 10 weeks in 1989. "The big retailers are going to drive people to run their business the right way," says Larry Reiner, Jik's vice-president for marketing.

The trouble is, many small suppliers fear their niche with the big retailers is rapidly shrinking. For starters, few small companies can make the kind of investments in production capacity it takes to serve the giants. Worse, the power retailers are cutting back the number of their suppliers in the name of efficiency. Some retailers aim to pare their vendor lists by 10% a year for the next several years, says Philip H. Kowalczyk, management consultant at Kurt Salmon Associates.

That makes some more determined than ever to play with the big boys. For almost three years, Brik Toy Co. of Houston sold its outsized building blocks to such upscale specialty stores as F.A.O. Schwarz. But recently, it landed business with Wal-Mart, Target, and Toys 'R' Us. Now, President John C. Brannan expects revenues of $4 million in 1992, up 400% from last year.

What Brik lacks in size, it aims to make up in flexibility. To meet the lower retail price Wal-Mart wanted on its product, it changed the packaging and cut the number of blocks in one set. The small company recently started its first national ad campaign to back its newfound growth.

Sometimes speed, quality, and flexibility aren't enough. Wal-Mart cut Quick's from 700 to 100 stores when it found a cheaper lollipop, says Howard Quick. He's now fighting to regain the business. But to avoid overdependency on the big retailers, Quick's is also beefing up sales to other outlets, such as schools, groceries, and the military. Still, for Quick's and other small suppliers, the fastest way to grow is to tie their fates to the power retailers--and hang on for dear life.Wendy Zellner in Dallas, with Marti Benedetti in Buchanan, Mich.